Flogas Britain Ltd v Calor Gas Ltd

Damages for breach of confidence are assessed by reference to the claimant’s financial loss, rather than the value of the confidential information as such. Causation remains a matter for the court. Where loss is difficult to quantify, the court must make the best assessment possible from the evidence, but evidential presumptions cannot require acceptance of evidence the judge rejects. Copying customer data can constitute extraction of a substantial part of a protected database in qualitative terms where the data reflects significant investment. An employer may be vicariously liable for employees’ handling and copying of business data where the connection with their employment is sufficiently close. A claimant cannot recover twice for loss arising from the same facts, and additional damages require more than proof of infringement.

Flogas claimed damages from Calor for misuse of part of Flogas’s domestic customer database in direct-mail campaigns. Liability for breach of confidence was admitted, and the trial concerned quantum. Flogas also claimed infringement of its database right, which Calor disputed, together with additional damages.

The court assessed six heads of loss, disputed expert methodologies, causation, mitigation and the appropriate discount rate. It also considered whether copying and supplying the customer data amounted to extraction of a substantial part of a protected database, whether Calor was vicariously liable, and whether additional damages were justified.

The claim succeeded in part. The court preferred Calor’s expert methodology for identifying loss caused by the mail shots. It awarded £142,052 for customers who moved to Calor, subject to adjustment for discounting, and £69,159 for attributable price reductions. No sum was awarded for customers moving to other suppliers or for customers Flogas might otherwise have won.

1. Quantum and causation. Loss had to be proved by evidence addressing whether the mail shots caused the particular loss. Statistical normalisation showing that customers left did not establish why they left. The Memopad records, although imperfect, were the best available evidence and could properly be used. The court accepted a four-year loss period and applied a 9% discount rate.
2. Other loss. Flogas established significant disruption to its business and recovered £21,126.87 for management time. It also recovered £45,599.63 for necessary forensic costs incurred in recovering the database. Interest was agreed at LIBOR plus 2%, compounded annually.
3. Database right. The database satisfied the statutory definition. There had been substantial investment in obtaining, verifying or presenting its contents. Copying the database to Calor systems and supplying data to an agent constituted extraction. The extracted material was a substantial part in qualitative terms, making quantitative analysis unnecessary.
4. Vicarious liability and additional damages. The handling and copying of the data had a sufficiently close connection with the employees’ work for Calor to be vicariously liable. Ordinary damages could not be recovered twice. Additional damages were refused because the conduct lacked the required further reprehensible characteristics and Calor’s benefit did not exceed the loss already compensated.

Judgment was therefore for Flogas under Heads 4 and 5, for Calor under Heads 1–3, and no additional damages were awarded.